Top 25 Baseball Stories of 2017 - No. 24: Disney purchases majority stake in BAMTech
We’re a few short days away from 2018 so it’s a good time to look back at the top 25 baseball stories of 2017. Some of them took place on the field, some of them off the field and some of them were more akin to tabloid drama. No matter where the story broke, however, these were the stories baseball fans were talking about most this past year.
Back in 2000, Major League Baseball created a joint venture between the leagues and its 30 owners called Major League Baseball Advanced Media (MLBAM). Each owner contributed about a million bucks a year over a four year period to create the thing, which is less than the going rate for your team’s second worst relief pitcher. By 2017 that modest investment has now made each owner in excess of $100 million. Possibly much more.
MLBAM was simple at first. It was a vehicle for baseball teams to have a central authority managing team websites, to create an overall digital presence for the game and to sell tickets and merch. Over time it evolved into a streaming service for baseball games in the form of the subscription product, MLB.tv. MLB.tv proved to be successful in its own right, but it proved to be more successful as a proof-of-concept for streaming services in general. The technology was great, other people liked it and soon baseball -- which has never been all that visionary an enterprise -- realized it had something pretty big on its hands.
In 2015, Major League Baseball spun off the streaming technology into a separate company called BAMTech. It would keep control of the baseball properties using the platform under the authority of MLBAM, but BAMTech and its streaming product would be open to anyone who wanted to pay for its use. BAMTech already had an agreement with the NHL for streaming hockey games, but soon other content providers came calling, which put even more money into the pockets of baseball owners who still held the controlling interest in the company.
In August 2016, The Walt Disney Company acquired a 33% stake in BAMTech for $1 billion, which gave about $33 million to each baseball owner. At the time Disney also purchased an option to acquire a majority stake in the future. They waited about a year.
Back in August, Disney announced that it had agreed to purchase a majority stake in BAMTech, putting its ownership share at 75%. The price for the new shares exceeded $1.5 billion. While there is a bit of murkiness to the numbers, sources familiar with the deal told NBC Sports earlier this month that each owner will net about $68 million, payable in the early part of 2018. Between that and last year’s round, baseball owners will have realized in excess of $100 million, all for a pocket change investment made by them or their predecessors over a decade ago.
The owners have maintained about a 15% stake in BAMTech, and that’ll make them even more over time. After all Disney, as is its wont, will surely monetize the living hell out of BAMTech. It announced in August that it is launching its own streaming service, for sports with ESPN-branding on top of the BAMTech platform, and for Disney content -- including Marvel, Pixar and Star Wars content -- which will set them up as a rival for Netflix and Amazon. The enterprise will make billions. Owners may very well make more money off of it than they do on their baseball teams, at least in terms of straight profits on revenue go.
Good for them. Just remember that the next time your favorite team’s owner says he doesn’t have the money to pay your favorite player.